Well known payment cards are used by millions of people worldwide to facilitate various types of commercial transactions. In a typical transaction involving the purchase of a product or service at a merchant location, the payment card is presented at a point of sale terminal (“POS terminal”) located at a merchant's place of business. The POS terminal may be a card reader or similar device that is capable of accessing data stored on the payment card, where this data includes identification and authentication data. Data read from the payment card is provided to the merchant's transaction processing system and then to the acquirer, which is typically a bank or other institution that manages the merchant's account.
To ensure the security and global interoperability of chip based payment cards, it is well known EMV standards which define the interaction between EMV-compliant payment cards and EMV-compliant POS terminals. Therefore to accept EMV payments, merchants have to deploy EMV-compliant POS terminals which support dual direction communication protocols. Such EMV-compliant POS terminals hardware, their deployment and their maintenance are considerable costs for the merchants.
Although this existing payment instruments function well, mainly due to the fact that the card associations have been protecting the consumers by passing on losses to merchants and banks, it is clear that banks, merchants and consumers desire a simple, secure method to conduct financial transactions.
Today, technology has revolutionized the way that consumers make purchases and expanded the range of retail channels. Indeed, mobile devices, such as mobile phones, play an increasingly versatile role in daily life. Many new features and services are being developed in an attempt to expand mobile phones beyond their traditional role of voice and message transmission.
Mechanisms for users to perform transactions are evolving with today's technology. Such mechanisms include blue tooth communication, Near Field Communication (NFC), Quick Response (QR) code scanning, WiFi communication, and the like.
In the case where the payment experience is automated by a facility with Near Field Communication (NFC), the facility must have a NFC-compatible payment terminal, which is inconvenient for the facility because of the hardware, software, and support expense associated with having NFC-enabled devices on site. Moreover, in order for the customer to use the NFC mechanism, the customer's smart phone has to have stored sensitive information on the customer's smart phone, such as: credit card numbers, loyalty numbers and so forth. Even the best software is still subject to potential hacking and compromise if the smart phone is acquired or if a remote connection can be made to the smart phone.
In the case of a transaction that uses QR (Quick Response) codes or bar codes that give customers an easier way to pay, information fluxes between three parties of the transaction: the seller (with his POS), the buyer (with his mobile phone), and a server of the payment system (bank or similar). The seller, when he has to carry out a transaction for selling one or more products, requires a bar code or a Quick Response (QR) code to the POS. The bar code or the QR code is displayed or printed and provided to the buyer, who captures it by a mobile device and sends, by SMS, Wifi, network, Internet . . . , to the server. The server verifies the identity of the buyer. Once such an identity is verified, the server sends to the seller a notification of effected payment, with which the seller can close the sale and deliver the goods and purchase receipt.
This method has the drawback that it needs the use of the POS and occupies the server with many information exchanges, what can be critical in some periods in the year because of the enormous amount of required transactions.
In the case of an online transaction, a majority of e-commerce and m-commerce sites on the internet use ad hoc payment methods. For example, if a person wants to purchase coffee online, that person has to register and create an account with an online coffee merchant by entering his personal and financial information on websites. Further, this account creation process must be repeated with other vendors for other purchases. This process is inconvenient to all parties involved. The merchant must maintain a dedicated account management and payment system. The customer must establish separate accounts with numerous merchants, in addition to remembering the username and password information for each merchant's website. With this payment system, when the consumer is ready to pay, the POS terminal/system can print or display a two-dimensional (2D) barcode or Quick Response (QR) code along with the transaction details. The merchant provides this to the consumer, who scans the code with his/her mobile device. The scanned imaged code is linked with the consumer's mobile phone, which can then be directed for payment of the transaction, to the user account via the mobile device.
This payment system has the drawback that it needs the use of connection data between the user account and the mobile device during the payment, what can be critical when the connection data is unavailable during the payment.
One problem with the variety of existing mechanisms used to interact with customers is that often the customers are required to establish a connection before a transaction can concluded. This poses a security risk that some consumers do not want to engage in and it also slows down the transaction.
Moreover, QR code payment is not compliant with EMV transaction protocols because it is not a duplex communication. Therefore, it's not possible to do a kind of EMV transaction which allows authenticating the transactions by using only one QR code.
As the mobile computing capabilities and development of robust wireless network infrastructure merge, it is clear that there is an increasing desire for faster, cheaper, secure and more convenient image code payment systems to conduct financial transactions which can be compliant with standard protocols such as EMV standard.
As a result, there is a great need for conducting financial transactions between individuals without having to depend on the mobile data connection or support duplex communication like NFC while be able to authenticate the transaction.